Middle Market Digest: This Week in the South and Mountain Regions

Of the many tax changes under discussion by the Trump administration, six measures pose material implications for commercial real estate, according to a Transwestern report that covers the global economy and commercial real estate. If passed, these measures would reduce the top corporate tax rate from 35 to 20%, allow immediate and full deduction of capital investment expenditures, eliminate interest deductibility on future loans, allow net operating losses to carry forward indefinitely, eliminate 1031 exchanges, and tax carried interest on capital gains as ordinary income.

“Elimination of interest deductibility is a particular concern for investors, although a reduced corporate tax rate could mute its impact,” said Tom McNearney, Transwestern chief investment officer and the report’s author. “Yet it is difficult to imagine that President Trump, who has taken advantage of commercial real estate borrowing, would eliminate interest deductibility.”